Bye, Bye, Biden. So, What’s Next?

It was inevitable, and now it’s official. Joe Biden is exiting the presidential race, leaving the door open for the Democratic Party to select another candidate to run against Donald Trump.

There’s not much time left until November 5th, which is Election Day in the U.S. It would have been easier for Americans to digest this development a year ago or even six months ago. Now there’s a last-minute feeling, especially as the Democrats scramble to find a replacement for Biden.

First of all, I have to point something out. In his X/Twitter announcement, Biden wrote, “I believe it is in the best interest of my party and the country for me to stand down.”

Notice that Biden literally put the “best interest” of his “party” before “the country.” I’m not sure if he and his ghostwriters intentionally sent that message, but it shouldn’t be ignored by discerning Americans.

Biden also wrote that he would “speak to the Nation later this week in more detail about my decision.” But does it really matter, at this point, what he has to say about anything? Everybody’s focus will now be on the Democrats’ new candidate choice.

For whatever it’s worth, Biden went ahead and endorsed Vice President Kamala Harris as his presidential-candidate pick. Whether this holds any weight is another matter entirely.

Courtesy: Bloomberg, @Schuldensuehner

For investors and odds makers in general, the only certain thing is that this sudden development adds uncertainty. Without a doubt, you’ll see and hear a whole lot of posturing and jockeying for position among the nation’s career politicians in the coming days.

Should any of this affect your portfolio for the remainder of 2024 and afterwards? Only if you trust the government and the things they promise. Otherwise, your long-term diversification strategy doesn’t need to change.

Take gold as an example. It’s an asset that’s tangible and has provided a store of wealth for centuries. It price against the U.S. dollar is significantly higher than it was five, 10, and 20 years ago.

The balance of power has shifted from Republicans to Democrats and back again multiple times since the start of the millennium. Yet, just holding one’s gold and not worrying too much about who’s in power has been a great strategy.

Yet, it’s easy to let the reactions of short-term traders lead you astray. They’ll throw you off your game by head-faking asset prices in one direction, only to reverse course and make money while you’re losing it.

Courtesy: Barchart

Here’s a textbook example of this with the Bitcoin price. Yes, Bitcoin sold off when Biden announced that he’s exiting the presidential race, but then it came right back up.

Some commentators may speculate that Bitcoin fell on Biden exiting the race but recovered on his endorsement of Harris. In other words, traders of risk-on assets like Bitcoin tend to sell on uncertainty and buy back on clarity.

There is no clarity, though, until November 5th at least. And if the election is contested, then the uncertainty could persist in 2025.

So, stop seeking certainty if that’s your habit as an investor. Instead, take a close look at your portfolio strategy and determine whether it’s sufficiently diversified to handle all possible outcomes.

If not, then consider adding assets that don’t depend on the federal government fulfilling its promises. That way, you can enjoy the clown show from a safe distance and build your wealth over time regardless of who’s in the news.